Difference between PAN, TAN and TIN

Terms related to Income Tax can often be confusing, sounding similar but having different meanings and purposes. With numerous words commonly popping up when we file taxes or approach the Income Tax Department for clarification, knowing them can ease out the entire process, offering us valuable insight. Some of the most used terms we come across are PAN, TAN and TIN, each having subtle nuances which can simplify your word of tax.

Know the terms – PAN, TAN and TIN

Permanent Account Number – A Permanent Account Number or PAN is a unique 10 digit alphanumeric code which is provided to every taxpayer or assessee in the country. It is issued by the Income Tax Department and is a mandatory requirement for every entity indulging in economic activity beyond a certain financial limit in the country.

Tax Deduction and Collection Account Number – TAN is a unique 10 digit alpha numeric code whose primary purpose is related to deduction or collection of tax. All entities who deduct or collect tax must have a TAN, quoting it in their TDS or TCS documents.

Taxpayer Identification Number – TIN or Taxpayer Identification Number is an 11 digit numeric code which is mandatory for traders or dealers who participate in transactions which attract VAT. All businesses which participate in interstate trade are expected to have a TIN. A TIN is often called the VAT Number or Sales Tax Number and individuals should not confuse these terms.

Differences between PAN, TAN and TIN

PARAMETER

PAN

TAN

TIN

Issuing Agency

Income Tax Department

Income Tax Department

Commercial Tax Department of respective state

Code type

10 digit alphanumeric code

10 digit alphanumeric code

11 digit numeric code (first 2 digits are the state code)

Code content

The first 5 digits are alphabets representing various information, followed by 4 numbers and an alphabet

A TAN is composed of 4 alphabets, followed by 5 numbers, with an alphabet as the last digit

A TIN is composed of 11 numbers

Purpose

PAN acts as a universal identification code for financial transactions

Streamline deduction and collection of tax at source

Track VAT related activities in the country

Who should own it

Every taxpayer/assessee

Every individual/entity who has to deduct or collect tax at source

Any dealer or trader who is liable to pay VAT

Laws which account for it

Section 139 A of the IT Act of 1961

Section 203A of Income Tax Act of 1961

Different states have different Acts under which TIN is applicable

Fines/Penalties

A penalty of Rs 10,000 can be imposed for failure to comply with the rules

A penalty of Rs 10,000 can be imposed for failure to comply with the rules

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